Corruption scandal engulfs Saudi prince

LONDON — LONDON -- Saudi Prince Bandar bin Sultan, the powerful former ambassador to the United States who has been one of the Bush administration's strongest allies in the Middle East, was publicly linked to a widening corruption scandal yesterday with reports that a British aerospace company secretly paid up to $2 billion into bank accounts at the Saudi embassy in Washington.

The new allegations point directly at Bandar, son of the Saudi crown prince and a man who has been a key ally for both the current President Bush and his father. For years, the prince has been considered the most vital go-between in the close and often secretive relationship between the U.S. and the Saudi royal family.


According to reports by the BBC and London's Guardian newspaper, documents show that BAE Systems made cash transfers to Bandar every three months for 10 years or more, drawn from a confidential account at the Bank of England to which British government departments had access.

The payments are alleged to have grown out of a 20-year, $86 billion oil-for-arms deal under which Britain supplied Saudi Arabia with warplanes and other military equipment. The deal, known as al-Yamamah, was Britain's largest export contract.


A former BAE official has said the company made legal payments to "agents" beginning in the 1980s. But news reports said that money was funneled to Bandar, with some of the cash going into an account used to fund the prince's private Airbus. The money reportedly was described as being fees for marketing services.

"Hundreds of thousands and millions of dollars were involved," U.S. bank investigator David Caruso told the BBC. He confirmed his account in a brief interview with the Los Angeles Times. "There wasn't a distinction between the accounts of the embassy, or official government accounts as we would call them, and the accounts of the royal family," he said.

The reports suggested for the first time that Britain's Ministry of Defense authorized the secret payments, and they left open the possibility that payments occurred after 2001, when Britain made it illegal to bribe foreign officials.

The al-Yamamah contract already was the center of a government investigation. But in December, that three-year investigation was suddenly halted in the interest of Britain's "national and international security" with the approval of Prime Minister Tony Blair. The new allegations re-ignited controversy over that decision.

Kim Murphy writes for the Los Angeles Times.